Bank of America Proposes $26B-$51B Dividend to Narrow Nvidia’s 50% P/E Gap
Bank of America analysts say Nvidia could raise its dividend yield to 1% with a $26B-$51B payout, potentially closing a roughly 50% P/E discount versus Magnificent Seven peers. Alphabet’s plans to boost AI infrastructure spending to $180B-$190B reinforce demand for Nvidia data center processors.
1. BofA Proposes Enhanced Dividend Payout
Bank of America analysts recommend Nvidia allocate $26B to $51B toward dividends, raising its yield to as much as 1%. They argue this move could signal sustainability and broaden the company’s investor base among income-oriented funds.
2. Valuation Gap and Fund Ownership
Nvidia trades at approximately 26x and 19x on 2026 and 2027 earnings estimates, roughly a 50% discount to peer averages of 49x and 41.5x. Its 0.02% dividend yield results in ownership by just 16% of equity income funds versus a 32% peer average.
3. Financial Impact and Execution
The proposed $26B-$51B payout would equal 15%-30% of projected 2026 free cash flow, estimated at over $200B. Implementing this plan would align Nvidia’s capital returns with historical norms and peer levels while requiring careful balance with R&D and data center investments.